Earnings Call Transcript - CXW Q4 2025

Operator, Operator

Good day, and thank you for standing by. Welcome to the Q4 2025 CoreCivic Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to turn the call over to Jed Bachmann. Please go ahead.

Operator, Operator

Thank you, operator. Good morning, everyone, and welcome to CoreCivic's Fourth Quarter 2025 Earnings Call. Participating on today's call are Patrick Swindle, CoreCivic's President and Chief Executive Officer; and David Garfinkle, our Chief Financial Officer. We are also joined here in the room by our Vice President of Finance, Brian Hammonds. On this call, we will discuss financial results for the fourth quarter of 2025 as well as financial guidance for the 2026 year. We will also discuss developments with our government partners and provide you with other general business updates. During today's call, our remarks, including our answers to your questions, will include forward-looking statements pursuant to the safe harbor provisions of the Private Securities and Litigation Reform Act. Our actual results or trends may differ materially as a result of a variety of factors including those identified in our fourth quarter 2025 earnings release issued after market yesterday as well as in our Securities and Exchange Commission filings, including Forms 10-K, 10-Q and also 8-K reports. You are cautioned that any forward-looking statements reflect management's current views only and that the company undertakes no obligation to revise or update such statements in the future. Management will discuss certain non-GAAP metrics. A reconciliation of the most comparable GAAP measurement is provided in the corresponding earnings release and included in the company's quarterly supplemental financial data report posted on the Investors page of the company's website at corecivic.com. With that, it is my pleasure to turn the call over to our CEO, Patrick Swindle.

Patrick Swindle, CEO

Thank you, Jeb. Good morning, and thanks, everyone, for joining us for CoreCivic's Fourth Quarter 2025 Earnings Call. On this morning's call, we will discuss our latest operational results and update you on the latest developments and opportunities with our government partners. Following my opening remarks, I will hand the call over to our CFO, Dave Garfinkle, who will provide greater detail on our fourth quarter and full year 2025 financial results as well as introduce our 2026 financial guidance. Dave will also provide an update on our capital structure, including activity on our share repurchase program and other balance sheet initiatives. First, I'd like to provide an update on our activation activities, where we continue to move towards stabilized occupancy in mid-2026. As a reminder, we announced new awards in the second half of 2025 at the 600-bed West Tennessee Detention Facility, the 2,560-bed California City Immigration Processing Center, the 1,033-bed Midwest Regional Reception Center and the 2,160-bed Diamondback Correctional Facility. While three of the four previously idle facilities continue to receive additional populations, the fourth, Midwest Regional, continues to experience a delay in the intake process as we await the result of a special use permit application that we filed in December 2025. We've been engaged with the city on the application and the conversations have been productive. In aggregate, and excluding Midwest Regional, these three new contract awards are expected to generate annual revenue of approximately $260 million once our operations normalize. Once we reach stabilized occupancy on these previously idle facilities, which we expect to occur during the first half of 2026, we expect our annual revenue run rate to be approximately $2.5 billion and our annual EBITDA run rate to increase by almost $100 million year-over-year to approximately $450 million. This is not counting Midwest Regional or any additional contract awards. Let me emphasize that point. Our 2026 guidance is consistent with the commentary on our last earnings call, despite excluding Midwest Regional due to uncertainty around initial detainee intake. Once operational, that facility will provide upside to our initial 2026 guidance. Moving to a discussion of the business climate. In early January 2026, nationwide ICE detention populations were at historical highs of around 69,900 individuals, an increase of almost 10,000 individuals from the end of the third quarter. ICE was our first customer 43 years ago and has been our largest customer for over a decade. From the end of 2024 through the end of 2025, ICE populations in our care increased 5,903 individuals to just over 16,000 or 58%. Nationwide populations from the U.S. Marshals Service, our second largest customer, have declined from the prior year, partially offsetting the increase from ICE as facilities that share contracts between the two agencies have extended the capacity to ICE due to the higher demand. Marshals populations are also down nationwide due to fewer apprehensions at the southern border. Our average daily Marshals population has declined by 1,235 individuals from the fourth quarter of 2024. As we continue to look for additional ways to meet our government partners' needs, we believe we can make available substantial capacity to meet future demand. Even after the aforementioned activations, we own five idle corrections and detention facilities containing approximately 7,000 beds. Along with search capacity, we've made available at certain facilities and partial capacity we have in facilities that are currently in operation, we've informed ICE that we can provide it with nearly 13,000 additional beds. And this does not include additional capacity we may be able to provide through other means. We are confident that the detention beds that we provide are the most humane, efficient logistically, compliant, secure, readily available and provide the best value to the government. Our Dilley Immigration Processing Facility is a great example. This is a purpose-built facility for family residential housing that we first operated in 2014 under the Obama administration. Last year, we entered into a new agreement that extends into 2030. As part of that contract, we must meet performance requirements based on a combination of rigorous accreditation and government-established performance standards. There are full-time federal monitors on site to ensure accountability in compliance with the contract. This includes specific quality measures and standards for cleanliness, high-quality food, basic necessities, legal access, medical care and translation services. For those of you interested in learning more about this facility, I would encourage you to visit our website at www.corecivic.com, where you can take a virtual-guided tour. Beyond these federal opportunities, we are seeing an increase in opportunities at a state level as well. In addition to increases in populations under existing contracts, we're in discussions with several states in need of additional bed capacity. One or more of these opportunities could include the use of our idle correctional facilities. These opportunities could transpire in the coming quarters. I'll now move on to a high-level overview of our top line revenue and fourth quarter operational performance. Federal partners, primarily Immigration and Customs Enforcement and the U.S. Marshals Service comprised 57% of CoreCivic's total revenue in the fourth quarter. Revenue from our federal partners increased 49% during the fourth quarter of 2025 compared with the prior year quarter. Further breaking down our federal revenue, revenue from ICE increased $124.4 million or 103.4%, while revenue from the U.S. Marshals Service decreased by $11.3 million versus the prior year quarter. As mentioned, some of this decline is simply a shift in mix where ICE and Marshals share contracts. Revenue from our state partners increased 5% from the prior year quarter. This increase includes additional revenue from the State of Montana, resulting from two new contracts we signed with the state since the second quarter of 2024 and population increases in Georgia and Colorado. Total occupancy for our Safety and Community segments for the quarter was 78.1%, up 2.6 points since the year ago quarter. The average daily population across all of the facilities we manage was 56,380 individuals during the fourth quarter of 2025 compared with 50,202 in the year ago quarter. This increase was driven by more demand for our services, new contracting activity and the Farmville acquisition that was completed July 1, 2025. Our teams continue to be successful in working with our government partners in managing the additional people in our care for which we are focused on delivering the highest quality services and environment every day. Our fourth quarter results exceeded our internal projections for adjusted EPS and normalized FFO per share by $0.08 each and adjusted EBITDA by $8.6 million. Despite full year 2026 EBITDA guidance near record levels, our stock is currently trading at a discount to our historical trading multiples, which we believe does not reflect the cash flows of our business particularly considering the ongoing ramp of previously idled facilities, giving us good visibility of our growth potential in 2026 and beyond. Therefore, we plan to continue to prioritize our cash flow on share repurchases taking into consideration stock price and alternative opportunities to deploy capital, among other factors. That being said, we have the balance sheet flexibility to take advantage of other growth opportunities that we may identify. The substantial progress made during the year in reactivating previously idled facilities couldn't have been accomplished without the hard work of our employees and strong relationships with our government partners. I'm confident we have the right plan and the right teams in place to be successful, both in these and future activations. In the meantime, we continue to remain focused on effectively managing our core portfolio and ensuring we meet our high operational standards as well as those of our government partners. Without this focus and strong performance, these additional opportunities would not exist. And so as I turn it over to Dave to discuss our fourth quarter financial results in more detail, our capital allocation activities and assumptions included in our 2026 financial guidance, I'd like to again express my appreciation to our 13,000 employees. I want to recognize their focus and commitment to ensuring that everyone in our care has provided a safe, secure and humane environment, delivering industry-leading quality to every individual for which we are responsible.

David Garfinkle, CFO

Thank you, Patrick, and good morning, everyone. In the fourth quarter of 2025, we generated GAAP EPS of $0.26 per share and FFO per share of $0.51. Special items in the fourth quarter of 2025 included a $1.5 million net loss on the sale of assets and $0.7 million of M&A charges reported in G&A expense. Excluding special items, adjusted EPS was $0.27 compared with $0.16 in the fourth quarter of 2024, an increase of 69% and normalized FFO per share was $0.52 compared with $0.39 in the prior year quarter, an increase of 33%. Adjusted EBITDA was $92.5 million compared with $74.2 million in the fourth quarter of 2024, an increase of 25%. Adjusted EPS exceeded average analyst estimates by $0.09 per share and adjusted EBITDA exceeded average analyst estimates by $9 million. The increase in adjusted EBITDA from the prior year quarter of $18.3 million resulted from higher demand and utilization of our solutions by our federal and state partners, including revenue from ICE that more than doubled. The number of ICE detainees in our care followed national trends, which reached record highs during the fourth quarter of 2025. We manage approximately 23% of total ICE populations as of both December 31 and September 30, 2025, compared with approximately 25% at year-end 2024. Revenue from our state partners grew 5% and included notable increases from Georgia, Colorado, and Montana. Results for the fourth quarter of 2025 reflect the full activation of the 2,400-bed Dilley Immigration Processing Center, which was completed in the third quarter of 2025. Funding for this facility was previously terminated effective August 9, 2024, and the facility remained idle until its reactivation in the first quarter of 2025. Fourth quarter results also included start-up activities for new contracts at our 2,560-bed California City Immigration Processing Center and our 2,160-bed Diamondback Correctional Facility where we signed new management contracts during the year. Both of these facilities were idle at the beginning of the year and are expected to reach stabilized occupancy in the first and second quarters of 2026, respectively. These two facilities incurred facility net operating losses totaling $3.6 million in the fourth quarter of 2025. Other factors affecting EBITDA and per share results included higher G&A expense, more than offset by the favorable impact of our share repurchase program and the acquisition of the Farmville Detention Center on July 1, 2025. Collectively, these three items accounted for an increase in adjusted EPS and normalized FFO per share of $0.03. Operating margin in our Safety and Community facilities combined was 22.2% in the fourth quarter of 2025 compared with 23.6% in the prior year quarter. Excluding the four facilities in various stages of activation, operating margin was 24.1% for Q4 2025. As these facilities reach stabilized occupancy, we anticipate further margin growth. Turning next to the balance sheet. On December 1, we amended our bank credit facility to increase the size of the accordion feature that provides for uncommitted incremental extensions of credit and expanded the capacity under our revolving credit facility from $275 million to $575 million. Including the original $125 million term loan, commitments under our bank credit facility totaled $700 million which reflects the strength of our accessibility to bank capital and our deep banking relationships. Expanding the size of our revolving credit facility provides us with enhanced balance sheet flexibility while remaining positioned for strategic investments and long-term value creation such as through our share repurchase program. During the fourth quarter, we repurchased 5.3 million shares of our common stock at an aggregate cost of $97.3 million, increasing our year-to-date repurchases to 11.2 million shares at an aggregate cost of $218.4 million. These repurchases represent 10.2% of our outstanding shares at the beginning of the year and reduced the number of shares outstanding to 100 million as of December 31, 2025. Since the share repurchase program was authorized in 2022 through December 31, we have repurchased a total of 25.7 million shares at an aggregate price of $399.5 million or $15.52 per share. As of December 31, we had $300.5 million available under our Board authorization which includes an increase of $200 million authorized by our board in the fourth quarter of 2025, increasing the cumulative repurchase authorization to up to $700 million. After taking into consideration the share repurchases, our leverage measured by net debt-to-adjusted EBITDA was 2.8x using the trailing 12 months ended December 31, 2025. As of December 31, we had $97.9 million of cash on hand and an additional $311.4 million of borrowing capacity on our expanded revolving credit facility, which had a balance of $245 million outstanding providing us with total liquidity of $409.3 million. Moving lastly to a discussion of our 2026 financial guidance, we expect to generate diluted EPS of $1.49 to $1.59. FFO per share of $2.54 to $2.64. And EBITDA of $437 million to $445 million. Consistent with our past practice, guidance does not include the impact of new contract awards not previously announced because the timing of government actions on new contracts is always difficult to predict. Even though we entered into a new management contract with ICE at our Midwest Regional Reception Center last year, our guidance does not contemplate the ramp-up of detainee populations at this facility as the intake process continues to be delayed by a claim that a special use permit is required to operate the facility. Although we dispute this claim and consequently filed a lawsuit in state court, which remains under appeal, we have nonetheless filed an application for the SUP. Although we can provide no assurance, discussions have been collaborative, and we are optimistic in a favorable outcome, which would be upside to our guidance. We still have five remaining idle facilities containing 7,066 beds, and we believe incremental demand for more idle facilities will likely be needed once ICE absorbs the recently contracted beds. With historic funding levels for border security and immigration detention obtained under the One Big Beautiful Bill Act secured through September 2029 and an expectation of a continued increase in detention bed demand nationwide as well as growing demand from existing and potentially new state government partners, we believe there are numerous opportunities to activate additional idle facilities we own. We also believe there could be opportunities to manage additional bed capacity not currently in our portfolio. These opportunities would also be incremental to our guidance after considering any start-up expenses. We plan to spend $60 million to $70 million on maintenance capital expenditures during 2026 and $15 million for other capital expenditures. Our 2026 forecast also includes $35 million to $40 million for capital expenditures associated with previously idled facilities we are activating and for additional potential facility activations in order to prepare these facilities to quickly accept residential populations if opportunities arise. Approximately $23.5 million of the CapEx associated with activations represents capital expenditures included in our 2025 forecast that were not spent by year-end and therefore have been carried over to be spent in 2026. We expect adjusted funds from operations, or AFFO, which we consider a proxy for our cash flow available for capital allocation decisions such as share repurchases and growth CapEx such as facility activations to range from $245 million to $259.3 million for 2026. We do not believe the share price of our common stock reflects the value of the cash flows of our business as we are trading below historical multiples despite visibility of cash flow growth in 2026 driven by recent contract awards. Therefore, we expect to prioritize our cash flows to continue executing on our share repurchase program, which has been incorporated into the range of our guidance. The amount of our share repurchases will take into consideration our stock price, liquidity and earnings trajectory and alternative opportunities to deploy capital. We expect our annual effective tax rate to be 25% to 30%. The full year EBITDA guidance in our press release provides you with our estimate of total depreciation and interest expense. We are forecasting G&A expenses in 2026 to range from $160 million to $165 million. We're modeling our quarterly results. As a reminder, compared to the fourth quarter, Q1 is seasonally weaker because of two fewer days in the quarter, higher utilities and because we incur approximately 75% of our unemployment taxes during the first quarter, resulting in a collective $0.04 per share decline from Q4 to Q1 and negatively impacting our operating margins. However, in Q1 2026, these negative effects are expected to be offset by facility net operating income generated at our California City and Diamondback facilities, which are projected to reach profitability in the first quarter due to the continued intake of detainee populations.

Operator, Operator

And our first question for today will be coming from Raj Sharma of Texas Capital Bank.

Rajiv Sharma, Analyst

I noticed that there were no new reactivations in the fourth quarter. Could this be attributed to the government shutdown or the year-end? Additionally, there has been considerable discussion regarding warehouses.

Patrick Swindle, CEO

So to answer your question, this is Patrick. We did not enter into any new contracts in the fourth quarter. We have been actively engaging with our customer and are constantly looking for various ways to support their enforcement approach. The addition of capacity will be driven by demand for beds. There is already available demand within facilities that are currently operational, and we believe our peers are in a similar situation. Therefore, you can expect additional capacity to be added as required to meet this demand. The lack of a new award in the fourth quarter does not indicate a deficiency in potential additional demand. It rather reflects the natural fluctuations in demand we are experiencing. We are well-positioned with 7,000 beds currently available in idle facilities and an additional 5,000 beds in existing facilities that can be used immediately. We feel confident in our position, both with our current contracts and the capacity in idle facilities, as demand arises that necessitates additional contract actions.

Operator, Operator

Next question is coming from the line from the line of Matthew Erdner of JonesTrading.

Matthew Erdner, Analyst

You talked a little bit about the safety margins and kind of the expectation for those to improve. Is the decline in margin there just kind of as you guys activate these facilities, bring them online, like you're talking about with California City and Diamondback.

David Garfinkle, CFO

Yes, this is Dave. So absolutely, that's correct. I think if you backed out the three facilities that were being activated during the quarter, our margin was around 24%. And so as those facilities do reach a stabilized occupancy in the first half of 2026, we would expect that margin to continue to grow.

Matthew Erdner, Analyst

Got it. That's helpful. And then as a follow-up, you talked a little bit about the increased opportunities specifically to manage other facilities. What's your confidence on, I guess, gaining the capacity for you guys to bring in employees, get it staffed up. Are there any concerns there with staffing that? Just, I guess, what's the dynamic right there at the moment?

Patrick Swindle, CEO

So we reactivated our South Texas, our Dilley facility, very quickly, we're able to staff that rapidly being able to deliver our activation sooner than we had expected or modeled initially. In our other locations, we've been very successful in being able to staff up. And so we do not believe that our ability to staff would be a limiter in terms of our ability to offer or use our bed capacity. The team is very well structured. They developed operating plans coming into 2025 that would allow them to be able to respond quickly when a new facility activated we've made preemptive investments across our portfolio to prepare those facilities for use. So really, we don't see an inhibitor in our ability to activate either through capital needs or through staffing challenges, our ability to quickly respond to demand if it presents.

David Garfinkle, CFO

And I'd add, Diamondback, we actually didn't expect that to start taking detainees in until January but we actually activated that one earlier or began accepting detainees earlier in late December. It didn't have a big impact on the quarter, it was very late December, but it was indicative of our ability to hire and meet the demands of our partner in that case.

Operator, Operator

Our next question is coming from the line of Greg Gibas of Northland Securities.

Gregory Gibas, Analyst

Patrick, Dave, congrats on the results. Wondering if you can maybe speak to the current contracting environment and how your dialogue with ICE and the DHS has trended of late, and also maybe wondering along those lines, if you could or would be willing to opine on the recent headlines related to the Minnesota pullback that Homan announced and possibly investors misinterpreting that as a national mandate change.

Patrick Swindle, CEO

Sure. To address your first question, we are continually engaging with our customers to understand their needs and determine how we can contribute effectively. This ongoing dialogue is consistent, as it has been throughout current and previous administrations. We expect to remain engaged and discuss the needs and how we can best support them while ensuring we can deliver high-quality outcomes that align with their mission. We are always focused on being well-positioned to assist our government partners. While I can't provide specific updates on pipeline opportunities at this moment, I assure you that we are actively conversing on how to best support our partners' missions. Regarding your second question, it's important to consider the national enforcement activities and strategies. At any given time, ICE employs different enforcement tactics across the country. For instance, the situation in Minnesota was a large-scale enforcement action that differs from other actions we've seen nationwide. Drawing broader conclusions from this specific incident can be challenging as it was a unique enforcement initiative. Overall, I don't see significant changes in enforcement style or approach at this time, as what occurred in Minneapolis was not reflective of the regular practices observed across the country.

Gregory Gibas, Analyst

Great. That makes sense. Could you provide more details on your buyback plans, specifically regarding the shares repurchased this year and the 5% bought back in Q4, which is quite impressive? I would like to know how aggressive you intend to be with buybacks moving forward.

David Garfinkle, CFO

Yes, this is Dave. I'll address that. It was a very active quarter. We had planned to increase our buyback pace significantly in the fourth quarter, and we actually exceeded that expectation. In the fourth quarter, we repurchased shares at an average price of about $18.25, which is lower than today's trading price. We intend to continue buying back shares at this level. Even at $18.25, we believed it was a sound investment, given the notable discount to our historical EBITDA multiples. We have the full support of the Board for this strategy, and as long as we adhere to any legal restrictions, we will proceed with our buyback efforts.

Operator, Operator

Our next question is coming from the line of Ben Briggs of StoneX Financial.

Ben Briggs, Analyst

Congratulations on the quarter and the guidance. I've got a couple of quick ones here. So fiscal year guidance is for about $441 million. And I know you said during the scripted portion of the call that $450 million-ish is kind of the new EBITDA run rate. Can you just clarify, does that $450 million EBITDA run rate include the two new contracts that you discussed at the beginning of the call, but not the Midwest Regional Facility?

David Garfinkle, CFO

Yes, you got it exactly right.

Ben Briggs, Analyst

Okay. All right. Great. And then over and above that, if you were to activate the Midwest Regional Facility, what do you think the potential EBITDA upside from that would be?

David Garfinkle, CFO

We cannot reveal the EBITDA related to that facility, but we did provide the revenue figures associated with it, which is likely the best information I can share. For our full year guidance for 2026, we anticipate maintaining a run rate of approximately $450 million in the latter half of the year. If you deduct half of that, which is $441 million as the midpoint of our guidance, and subtract $225 million for the second half, you'll arrive at just over $100 million per quarter for Q1 and Q2. This information is quite specific. There is a noted dip, as I indicated in my prepared remarks, from Q4 to Q1, specifically a $0.04 decrease due to unemployment taxes and utilities. Additionally, the Midwest generated $60 million in annual revenue.

Patrick Swindle, CEO

When considering the guidance we've provided, it is based on the assumption that there will be no additional contract wins. This includes aspects such as the Midwest Regional and the potential activation of that facility pending the final approval of the SUP, which we are optimistic about. Furthermore, any other new business opportunities could lead to additional growth. Overall, our visibility into this guidance is the strongest it has been in several years, particularly due to the growth we expect in 2026.

Ben Briggs, Analyst

Understood. I appreciate that. My follow-up was going to be, you have five idle facilities with 7,000 beds in addition to these new contract wins? And did I hear you correctly when you mentioned that the total capacity for additional population could reach up to 13,000 beds?

Patrick Swindle, CEO

That's correct.

Ben Briggs, Analyst

Understood. Okay. I just wanted to clarify that. And then finally, I just want to touch on the revolver that you guys upsized in the share purchases. Does drawing the revolver remain an option for share repurchases? Or are you more likely to fund those repurchases with cash from operations?

David Garfinkle, CFO

Well, if you take our annual guidance, we always like to use AFFO as kind of the proxy for cash flow available for growth opportunities and buybacks and if you back out the growth CapEx that we have for the activations of the idle facilities, you're somewhere in the neighborhood of $200 million of annual cash flow. So that would be available throughout the year without increasing leverage. But certainly, the revolving credit facility can be used for whatever we wish it to be used for. So yes, it is available.

Ben Briggs, Analyst

Okay. Understood. I appreciate it. Thank you guys for the call and congratulations again.

David Garfinkle, CFO

Thank you.

Operator, Operator

The next question will come from M. Marin of Zacks.

Marla Marin, Analyst

So I have a couple of housekeeping questions because you've answered a lot of a lot of things on the call and in the Q&A. You did say during the prepared remarks that between the idled facilities that could be reactivated and other means you have significant capacity for if and when new contracts come online. So in 2025, you made that one acquisition of Farmville, are there any other potential small tuck-ins that you've seen come up that might be on the horizon? Or it's very remote that, that would be an opportunity.

Patrick Swindle, CEO

We have a business development team that's always actively out looking at opportunities that may be available. And so certainly, there's nothing that I would say that's imminent today. But we are going to evaluate opportunities that present. And from time to time, there may be opportunities to look at circumstances or situations that would be similar to Farmville. Obviously, we recognize where our stock is trading, and it's incredibly valuable at the current trading multiple. So a multiple would have to be pretty compelling to be better than our current stock price. But we do, on occasion, see those opportunities. And if they do, and we think it's a good strategic fit, we would avail ourselves.

Marla Marin, Analyst

Okay. I have another question. There seems to be a perception that, despite having substantial liquidity, it may not be enough to support all your initiatives. These include meeting new demand for capacity, possibly increasing capacity by reactivating idle facilities, share buybacks, and other growth opportunities. Can you elaborate on this, especially considering the potential for delayed payments from some government partners?

David Garfinkle, CFO

I understand your concern. As of December 31, we had over $300 million available on our revolving credit facility, which gives us ample liquidity to pursue our strategy despite a slowdown in some collections of receivables. Additionally, we had nearly $100 million in cash on top of that, so we are not limited by liquidity in executing our strategy. Furthermore, during the fourth quarter, we expanded our revolving credit facility by $300 million with the support of our banking group, increasing it to a total of $700 million. Therefore, we do not feel constrained by liquidity at all.

Patrick Swindle, CEO

And maybe to build off that, we've maintained a conservative leverage approach as well. And our EBITDA is certainly growing faster than our lever debt at this point. And so when you think about leverage policy, we're certainly going to continue to maintain a conservative approach. We're going to maintain appropriate levels of liquidity. We did make meaningful investments in the facilities, our idle facilities in anticipation of activation. So we did a bit of preloading in terms of the capital that would be necessary to support activation. So we're going to continue to make measured investments as appropriate, take advantage of opportunities to buy back stock based on its attractiveness. But at this moment, there's nothing that we see on the horizon that would cause us to believe we're capacity limited from a capital perspective.

Operator, Operator

And our next question will come from the line of Bill Sutherland of Benchmark.

William Sutherland, Analyst

I thought I'd zoom out a little bit here, just thinking about what the growth trajectory might be over a multiyear period for you guys given the visibility you have with ICE to '29 and some of the emerging state demand. I look back at EBITDA, even back to '09, and it's kind of been in a very steady range, but no discernible CAGR. So I just wondered how should we think about a potential CAGR here for the next three or four years?

Patrick Swindle, CEO

That's a great question. I think as you've said, you've gone back and done a historical review of the growth rate of the company over multiple years. And I think that's important in that what you typically see is that growth will come in periods of demand with very specific customers. So if you look back over the history of our organization, we've gone through periods where we would see significant demand from the State of California, for example, or a significant demand with the Bureau of Prisons or, at present, we're seeing meaningful demand from immigration and customs enforcement. What we know is that you've got large aging infrastructure for many of our state and federal partners you have demand needs that are presenting as both populations grow and service offerings are changing, and we believe we're in a position to provide that. And so I would say we're always going to be in a position where we've got the greatest visibility a year out. but our team is obviously focused well beyond this year and future periods. So I'd love to give you a more precise answer in terms of what would be sustainable growth after the current period. But obviously, that's something that we continue to be focused on, and we'll give updates as our pipeline develops both with other federal and state partners as well as we consider potentially other ways to deliver services to our customers, as we mentioned earlier.

William Sutherland, Analyst

Okay. You can't have a conference call these days without discussing AI. What are some ways you can integrate it into your business model? I believe this type of business will benefit greatly in terms of efficiency. How do you envision it being utilized within your organization?

Patrick Swindle, CEO

Well, there are a number of ways that we have contemplated use of AI in our organization. I think the most obvious in straightforward is in back office efficiency. So as we think about our ERP systems and we think about the ways that we support our facility operations from an administrative perspective, we're certainly seeing opportunities to enhance the way that we currently deliver those services. Out in our facilities, there are always opportunities to enhance what we're providing. Whether that be educational opportunities for the individuals in our care or whether that be security tools that we can use both to actively monitor and make our facilities safer. Whether that be making our cameras smarter as we're trying to evaluate activities that are occurring in the facility. There are a number of pilots that we have underway across the organization to explore how we may be able to use AI to enhance our services. But I would say we're also very sensitive to the fact that we are in an environment where we're managing care for individuals and want to be sensitive to what we use and how we use it so we can ensure that it's being used effectively. So we do hope to give updates in future quarters. We did make a meaningful investment this year in our team. We hired an executive leader, Laura Groschen, to step in as our Chief Information and Digital Officer. So I would view that as indicative of the investment that we're making to bolster our technology team and grow and build out our capabilities. We do believe that's part of our future. And again, we'll have more to update on future quarters as we are able to talk more specifically around some of those opportunities, some of which may be ultimately commercializable.

Operator, Operator

And our next question comes from the line of Joe Gomes of Noble Capital.

Joseph Gomes, Analyst

So let's go a little blue sky here. You talked about potential upside for Midwest. But let's assume ICE has got the 10,000 new enforcement employees up and running, increasing the pace of detainees out there. I think you've talked about 12,000 or 13,000 beds between existing contracts and idle facilities. If we got to the point where ICE was to contract for those beds or fill all of those beds. What could that mean for upside in terms of revenue and EBITDA?

David Garfinkle, CFO

Well, it's a tough question to answer. I guess if you took 13,000 beds, an average per diem, I don't know, just say, $125 a day. That's $593 million of incremental revenue. And if you assume we're on a 23% margin in the fourth quarter, that's $136 million of incremental EBITDA just to kind of use publicly available numbers in our reports.

Joseph Gomes, Analyst

Okay. There is a potential for nice upside, which is exciting to see. A major concern for investors has been the pace of detention by ICE, which has been below expectations. Many thought we would reach the 100,000 level, but we are slightly over 70,000. What is your perspective on this situation? Are you noticing any signs of an increase in the pace of detention, or are we still waiting for a more gradual improvement in retention?

Patrick Swindle, CEO

I would address that from a few perspectives. Looking back at the end of the previous administration transitioning to the current one, there were about 45,000 operational funded beds. Now, we've seen an increase to just over 70,000 beds in a relatively short time. One thing that has become clear to me during this process is the expectation that significant changes in infrastructure and the operating environment would happen right away. However, when examining how ICE implements enforcement actions, it is important to understand that these changes do not occur instantly. As mentioned by someone else, the organization did not fully enhance its team until late last year. Therefore, we need to consider that progress takes time because it involves a very complex system. As this system expands, it will lead to a higher demand for beds, but the growth has been slower than some expected. Nonetheless, if you take a broader view and assess the significant scale that has already been achieved, along with the timing of when additional enforcement resources were implemented, it is reasonable to anticipate ongoing growth.

David Garfinkle, CFO

Thanks, Joe.

Patrick Swindle, CEO

Thank you.

Operator, Operator

And the next question will be coming from the line of Kirk Ludtke of Imperial Capital.

Kirk Ludtke, Analyst

Patrick, David, can you hear me? In your prepared remarks, I think you said at year-end, ICE detained what, 69,000 and of which you detained 16,000. Occasionally, you see press reports that ICE is exploring other ways of housing detainees, repurposing industrial spaces, warehouses, and things like that. I'm just curious where that stands? Do you know offhand how many people are detained in facilities other than the facilities, your facilities or GEOs facility?

David Garfinkle, CFO

Yes, I'll take that one, Kirk. Yes, correct. The administration has pursued a number of alternatives since the beginning of the administration. You had facilities like Guantanamo Bay, Alligator Alcatraz, some international options, some state capacity blocks of state capacity. And I would say, I think the last time I looked at the total, the total number of people in detention in those alternatives is somewhere in the 5,000 range.

Kirk Ludtke, Analyst

Okay. Is that pretty stable or maybe I hate to ask you to provide guidance on something like that. But I mean, do you see that increasing? Do you think that's a viable alternative for ICE?

Patrick Swindle, CEO

ICE is going to continue to look at different ways to meet their capacity requirements. And as you look at, obviously, the bed need and availability, we have beds available in specific parts of the country. Our competitors have beds available in specific parts of the country. Sometimes the demand can be national. Sometimes it needs to be more localized. And so depending on locationally where that demand is manifesting, you could see traditional capacity used or you could see other alternatives use. I think there's certainly a lot of exploration in terms of different ways that the goal and mission can be accomplished. And we believe we could be part of some of those. And some of those are probably not best suited for our business model. But certainly, I think that will be an ongoing conversation as the administration thinks about how they can best innovate service delivery and make sure that they have the right beds in the right location they need to support their mission.

Kirk Ludtke, Analyst

Interesting. So it's not that the populations are different. It's more of a geographical consideration?

Patrick Swindle, CEO

We don't see significant differences in populations across the facilities we operate. While there are classification differences within each facility, the type of facility is less about catering to a specific population and more about being strategically located where demand arises. Some demand is national, so the location becomes less important as long as there is a transportation infrastructure to support that. In other cases, there may be a preference for facilities in specific areas where additional need is higher, which could make a distant facility less feasible.

Kirk Ludtke, Analyst

Got it. Okay. That's very helpful. I appreciate it. I am not aware of any place where ICE reveals the actual figures for deportations or detentions. If that information is available, I would love to know or find a way to estimate it. Do you foresee anything on the horizon that might increase detentions apart from just gradually expanding the network? Are there any significant events that could lead to an increase in detentions?

Patrick Swindle, CEO

I believe it's really the build-out of the enforcement infrastructure and the completion of training of those individuals who are being hired and then those folks being deployed to go out and enforce the mission. So I don't view it as much sort of a singular event as I do a progressive build of infrastructure that results in higher levels of enforcement, assuming that the policy remains static.

Operator, Operator

Thank you. And this does conclude today's Q&A session. I would like to turn the call back over to Patrick Swindle for closing remarks. Please go ahead.

Patrick Swindle, CEO

Thank you, operator. Since there are no further questions, I'd like to thank you all for joining our call today. We take very seriously the responsibility that we have in managing care of more than 55,000 individuals each day. We're grateful for the confidence our partners place in us as our 13,000 employees strive to deliver the highest quality services and programming for those in our care. Just this last weekend, we were able to celebrate the exemplary service of three of our correctional facilities and three of our residential reentry facilities at the triennial ACA reaccreditation hearings with near-perfect scores. This is just a small example of the work our team does but is indicative of the excellence that we aspire to every day. Our team has also done an exceptional job delivering positive results in our core portfolio and successfully ramping our activating facilities. Our guidance with assumed EBITDA and EPS growth of 21% and 40%, respectively, both at the midpoint is the most significant annual growth of our organization as forecast in many years. As a reminder, this growth assumes only already awarded contracts, excluding Midwest Regional, which is successfully activated would be additive to this initial guidance as would any additional opportunities that present to provide additional services to our federal state or local partners. Lastly, we believe that our shares remain significantly undervalued. Using the midpoint of EBITDA guidance, our shares are currently trading at roughly 6x forward EBITDA, well below our historical trading ranges. We're obviously evidencing our view of value with an active share repurchase program that increased in intensity during the fourth quarter while maintaining our consistent balanced leverage position. We're optimistic that as we successfully deliver on our outlook for this year, we'll see this value recognized in our shares. With that, operator, we'll close out our call for today. Have a great day, everyone.

Operator, Operator

Thank you. This concludes today's conference call. You may now disconnect.